Indiana's Offshore Job Losses and the American Dogma of "Free Capital" that Disempowers Communities

A terrific recent investigation by Indianapolis Star writer Tony Cook lays bare the American dogma that leaves workers and communities powerless to challenge offshore job flight (and makes a mockery of Donald Trump's vague promises about bringing jobs back).

The article, entitled "Under Pence, state gave incentives to companies that offshored jobs," ran August 28 and is here.

Cook's exposé is a textbook roadmap for reporters in every state. By cross-checking three lists--economic development tax-break awards, Worker Adjustment and Retraining Notification Act (WARN) notices, and Trade Adjustment Assistance certifications--Cook found numerous cases of subsidized companies offshoring jobs. It's happening everywhere, and it's one more reason why states and localities should fully disclose all of their tax-break awards online.

The story rightfully prompted many to ask: how can a state permit companies that take tax breaks to do such a thing? The same question could apply when companies move subsidized jobs across state lines.

It's hardly a new question: many of us started asking it when we began fighting plant closings in the mid-1980s. We discovered plants slated for closure had received subsidies. The fine print usually said that it was legal to take the tax-break money and run away with the jobs.

The truth is, there is a decades-old, bipartisan elite consensus in the United States that capital shall be free to migrate. When the WARN Act was negotiated and enacted in 1988, it was always clear that the 60 days of advance notice before mass layoffs or shutdowns was not being given to help save jobs, or to in any way enable challenges to capital's right to migrate. WARN was only ever intended to better enable dislocated workers to access social services and retraining help before their last day of work--a worthy goal but not a job saver.

The same is true of Trade Adjustment Assistance, which gives extra help to workers if it is determined they lost their jobs due to offshore job flight or import competition.

Many of us tried to avert closings by detecting corporate disinvestment of facilities much farther ahead of time; that was the point of Early Warning Manual Against Plant Closings that I wrote in 1986 and upon which the U.S. Department of Labor had me train all 50 states' Dislocated Worker Units in 1989.

But the WARN Act has played out exactly as we knew it was intended, and subsequent events, including the Supreme Court case DaimlerChrysler v Cuno and associated proposed federal legislation have made it clear: deeply entrenched interests want to preserve tax breaks with no capital-stability strings attached.

Clawbacks, or money-back refunds of wasted subsidies, are a long-established safeguard first popularized in my 1994 book No More Candy Store. They are necessary to protect taxpayers but far from sufficient to address America's job-flight problem. They were enacted by politicians who needed backside coverage after companies were allowed to take the money and run. Like the WARN Act, they were not enacted to challenge capital hyper-mobility.

If Indiana lawmakers or those in any other state are serious about cracking down on the abuse of subsidies by offshoring companies, they need to consider measures that would substantially raise the cost of exiting the U.S. and create more time and political space for public officials, workers and communities to challenge runaway decisions.

While I know there are various federal tax proposals around this issue, from the viewpoint of state policy, raising the cost of exit could mean safeguards such as tripling or quadrupling the cost of subsidy clawbacks. It could also mean fully employer-borne costs for retraining, years of financial community reparations to offset the loss of tax base, and redevelopment assistance for the abandoned facility.

Creating more space to challenge runaway decisions could mean advance notice of 270 days if a job were to be lost offshore. A state could mandate a special "SWAT Team" be created to intervene whenever an offshoring advance notice is received, composed of state and local agencies charged not so much with assisting workers but instead with exploring every alternative to offshoring to save the jobs.

A laurel to the Indianapolis Star for its exposé laying bare the elite dogma that has long left American communities hapless to question capital fight. It doesn't have to be this way.

Greg LeRoy directs Good Jobs First and is also the author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation (Berrett-Koehler, 2005).